Vietnam: What are the definitions of an industrial cluster or an industrial park? What are the differences between an industrial park and an industrial cluster?
What are the definitions of an industrial cluster or an industrial park in Vietnam?
Pursuant to Clause 1, Article 2 of Decree 68/2017/ND-CP, an industrial cluster is defined as follows:
- Industrial cluster means a place in which services are provided for industrial and cottage-industrial production, with defined geographical boundaries and without any inhabitant living in the cluster, and which is constructed to attract and relocate small and medium-sized enterprises, cooperatives, and cooperative associations to conduct production and business activities.
- An industrial cluster has an area not less than 75 ha and not exceeding 10 ha. An industrial cluster in a mountainous district or a craft village industrial has an area of not less than 75 ha and not exceeding 5 ha.
On the other hand, in Clause 1, Article 2 of Decree 35/2022/ND-CP, an industrial park is also defined as follows:
- Industrial park refers to an area that is enclosed by definite boundaries and specializes in the production of industrial goods and the provision of services satisfying the industrial production needs.
What are the differences between an industrial park and an industrial cluster in Vietnam?
In Clause 1, Article 3 of Decree 68/2017/ND-CP, fields, business lines, and business and production establishments encouraged to make their investment in and relocate to industrial clusters include:
- Business and production establishments that cause pollution or are likely to cause pollution in craft villages, populated areas, and urban areas and other production establishments which need to be relocated to an industrial cluster;
- Production of products and spare parts, and assembly and repair of machinery and equipment for agricultural and rural production;
- Production of supporting industrial products on the list of prioritized supporting industrial products promulgated by the Government;
- Production of consumer products and use of local raw materials and local labor;
- Business lines and products which are the local and regional strengths and other business lines in conformity with the planning for development of local industry and cottage industry;
- Agricultural, forestry and fishery processing industry.
Business entities involved in the fields and business lines mentioned in Clause 1 of this Article are given priority upon considering providing investment incentives and assistance.
Thereby, it is possible to distinguish industrial parks and industrial clusters through the following criteria:
Criteria | Industrial park | Industrial cluster |
Concept | An industrial park refers to an area that is enclosed by definite boundaries, specializes in production of industrial goods and provision of services satisfying the industrial production needs. (Clause 1, Article 2 of Decree 35/2022/ND-CP) | An industrial cluster means a place in which services are provided for industrial and cottage-industrial production, with defined geographical boundaries and without any inhabitant living in the cluster, and which is constructed to attract and relocate small and medium-sized enterprises, cooperatives and cooperative associations to conduct production and business activities. (Clause 1, Article 2 of Decree 68/2017/ND-CP) |
Area | There is no specific regulation on the maximum or minimum area of the industrial park Industrial parks can be fully expanded when meeting the requirements of the approved development planning. | An industrial cluster has an area not less than 75 ha and not exceeding 10 ha. An industrial cluster in a mountainous district or a craft village industrial has an area of not less than 75 ha and not exceeding 5 ha. |
Enterprises | Mainly large enterprises - serving industrial production | Small and medium enterprises, mainly industrial and cottage-industrial production. Mainly agro-forestry-fishery processing industry |
Functions | Industrial and service production for industrial production. There are no agricultural, forestry or fishery production activities | Production of products - spare parts for agricultural machinery and equipment |
Establisment conditions | Industrial park construction planning approved by the Government; has a comprehensive system of mechanisms and policies; synchronized infrastructure. | Industrial cluster construction planning must be approved by the State; have investors to build infrastructure; be able to fill 30% of enterprises after 1 year of establishment. |
For export processing enterprises | Export processing enterprises are allowed to establish and operate inside industrial parks | Export processing enterprises are not allowed to operate inside industrial parks |
What are the eligibility requirements for establishment of an industrial cluster in Vietnam?
Pursuant to Article 10 of Decree 68/2017/ND-CP as amended by Clause 8, Article 1 of Decree 66/2020/ND-CP as follows:
Article 10. Eligibility requirements for establishment or expansion of industrial clusters
1. Eligibility requirements for establishment of an industrial cluster:
a) The industrial cluster development plan must be available and included in the approved provincial planning;
b) There is an enterprise or cooperative that has a legal status, capacity and experience to invest in construction of technical infrastructure or a unit that is assigned to invest in construction of technical infrastructure;
c) In the event industrial clusters have been established within a district, the average occupancy rate of those industrial clusters must exceed 50% or the clusters’ total industrial land fund yet to be leased out must be less than 50 ha.
2. Eligibility requirements for expansion of an industrial cluster:
a) The industrial cluster must not exceed 75 ha and there is a land fund conforming to the land use planning and land use plan within the district;
b) There is an enterprise or cooperative that has a legal status, capacity and experience to invest in construction of technical infrastructure or a unit that is assigned to invest in construction of technical infrastructure;
c) The occupancy rate is at least 60% or the demand for leasing the industrial land in the industrial cluster exceeds the area of current land of the industrial cluster;
d) The industrial cluster has completed construction of and put common shared technical infrastructural constructions into normal operation in line with the approved detailed plan.
Thus, the eligibility requirements for establishment of an industrial cluster in Vietnam are:
- The industrial cluster development plan must be available and included in the approved provincial planning;
- There is an enterprise or cooperative that has a legal status, capacity and experience to invest in construction of technical infrastructure or a unit that is assigned to invest in construction of technical infrastructure;
- In the event industrial clusters have been established within a district, the average occupancy rate of those industrial clusters must exceed 50% or the clusters’ total industrial land fund yet to be leased out must be less than 50 ha.
What does the application for establishment of an industrial cluster in Vietnam include?
Pursuant to Article 11 of Decree 68/2017/ND-CP, the application for establishment of an industrial cluster in Vietnam includes:
- An application form for establishment or expansion of an industrial cluster, which is submitted by the district-level People’s Committee;
- The written request for acting as the investor in technical infrastructure construction project or written request for establishment or expansion of the industrial cluster from the unit assigned to construct industrial cluster infrastructure enclosed with an report on investment in establishment or expansion of the industrial cluster;
- A copy of certificate of establishment or a document proving legal status;
- A copy of one of the following documents: the investor's financial statements of the last two years; parent company's commitment to provide financial assistance; financial institution’s commitment to provide financial assistance; guarantee for investor’s financial capacity; explanation for investor’s financial capacity;
- Other documents.
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